It's complicated, but that's not a correct assessment.
China is not very much regulated at all - a regulation must be regular, but the enforcement of rules in China is anything but regular.
On one side, you have the wild west (east?) of unregulated capitalism, on the other side, you have the Party coming down with the hammer over things it doesn't like, The bureaucracy mainly serves the latter.
Obviously, this is recognized as a problem, rule of law has been the drive for years but the system cannot and does not change over a day.
I have been reading many, many news reports that I can summarize as inconsistently applying laws. The US just went through 4 years of an administration that flagrantly violated laws, got caught, and escaped punishment. The wave of evidence associated with police brutality proves that not all are equal before the law. Corruption is endemic in our whole system -- people with resources can avoid punishment for embezzlement, theft, rape, "disorderly conduct", and a long list of other crimes. The system has enormous opportunity for deciding what to prosecute and how tough of punishments to mete out -- which is good, in many ways, since rigid universally applied rules don't actually produce good outcomes -- and we have overwhelming evidence that that leeway is applied to systemically advantage certain groups and disadvantage others. This shouldn't be hard to believe, since it's everywhere. Not just racial or otherwise disadvantaged groups; it includes "old boys' clubs", friends protecting friends, and cases where harmed people resort to a pastor or elder rather than the justice system. It's really not hard to find examples where the favored people are given special treatment, including immunity to laws.
So starting to inconsistently apply laws isn't really the issue. We'd have to, at some point in time, have consistently applied laws in the first place for that to matter.
It's only a matter of degree, and flavor -- eastern systems seem to be more ok with granting leeway based on personal relationships. Western systems tend to be very suspicious of that, and depend more on who has the resources or formal connections. But no system in the world has long lasted without some amount of leeway / wiggle room / corruption.
And because the chinese really don't care a lot about regulations or bureaucracy, they actually achieve something.
Where is china producing cutting edge tech? They've consistently failed at in house chip design and production over the last 50 years.
Most major tech breakthroughs are still coming out of west plus japan and SK.
Make no mistake, China is just as deeply sick as the west, perhaps more so - it just manifests in different ways.